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<title>July 2001: Caps In The Ring</title>
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<p align="left"><font face="Arial"><strong><small>About The Author:<br>
<br>
</small></strong><span lang="X-NONE" style="color: black"><font size="2">
ROGER FELDMAN, Co-Chair of Andrews Kurth LLP Climate Change and Carbon
Markets Group has practiced law related to the finance of environmental and
energy projects and companies for 40 years. In particular, he has analyzed
and executed a wide variety and substantial value of project financings. He
chairs the American Bar Association’s Committee on Carbon Trading and
Finance, serves on the Board of the American Council for Renewable Energy,
and has been a senior official in the Federal Energy Administration. He is
a graduate of Brown University, Yale Law School and Harvard Business School.</font></span></font></p>
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<img src="../images/feldman.gif" alt="Washington Viewpoint by Roger Feldman" border="0" width="375" height="75"><p><b><u><br>
June 2001</u><br>
</b></p>
<p><font size="6"><b>"--Through A Spectrally Selective Glazing System,
Darkly"</b></font></p>
<p><strong>by Roger Feldman -- Bingham, Dana L.L.P.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
200</em>1/10/06)<br>
</font></p>
<p ALIGN="JUSTIFY">We have recently swept through (in terms of sound byte
attention span) the (real) California Crisis, the first sighting of the
(Administration manufactured) "Energy Crisis" and now have reached the
Cheney Crisis Fix, which neatly ties the two crises together in a
boundlessly disingenuous way. You see, California caused its crisis by
relying on conservation and Cheney will fix it for all of us by
production – anywhere and anything that burns. Real men don’t do
conservation; instead, they absorb America’s our boundless resources.
Transmission problems? Now we can have Federal eminent domain for
transmission lines. No more NIMBY – no more backyard – no libertarian
lament, though, since the Federal takings will not be based on enforcement
of environmental laws. Anyway, the President has assured us that his tax
refund will help us cover those rising energy prices (Knew there was a
secret reason for it all along.)</p>
<p ALIGN="JUSTIFY">Beneath this calculated balderdash, three key underlying
energy policy issues are obscured from the public eye, and possibly from the
Administration’s cognizance (after all, if Star Wars II is good, even if it
doesn’t really work as we have been advised, why not Energy Policy also):</p>
<dir>
<dir>
<li>
<p ALIGN="JUSTIFY">What about deregulation? Does it really work, and
should it be championed and standardized throughout the country? (Call
it last year’s energy debate.)<br>
</li>
</dir>
<dir>
<li>
<p ALIGN="JUSTIFY">What about efficiency (as opposed to self-abnegating
conservation) programs, which have worked and promise to reduce the
phantasmagoric number of power plants Regent Cheney has indicated we
need to build to avoid freezing in the dark? Should it be scrapped or
should efforts be redoubled?<br>
</li>
<li>
<p ALIGN="JUSTIFY">Can the two be reconciled, the way they taught us in
Economics 101?</li>
</dir>
</dir>
<p ALIGN="JUSTIFY">Unfortunately, the answers lie buried under political
code words. Under the guise of emergency in the West, the Democratic cry for
"caps" or "Price control" has morphed into the championing of re-regulation.
For Republicans "caps" means interference with the (ultimately)
supply-inducing free market system; "free markets" means, well, whatever
system that’s not California that states devise (because free markets
somehow are tied to States Rights, and the rights of some utilities to
continue to monopolize their markets). Fair and efficient electric energy
provision will now be achieved simply by repealing PUHCA , trusting that
market forces will be with us.</p>
<p ALIGN="JUSTIFY">As for efficiency – that approach that DOE just said
could save 600 powerplants equivalent by 2020. The code word in the debate
is "balance." The catch is what it means. For Republicans, it simply [means]
principally to be eyewash. Throw in some tax incentives for biomass and
announce the energy plan to recycle nuclear fuel at an alfalfa and turkey
manure fueled plant. Roll back the air conditioner efficiency standards.
They’re just another kind of irrelevant endangered species, at best, or
weak-kneed, personally masochistic conservation at worst. For Democrats,
"balance" still seems more like an effort to wear a White Hat than a
coherent program to address the industrial and commercial requirements of
consumers in a more businesslike manner. It is "gored" as an also ran
solution, rather than an approach which, if fueled by incentives anywhere
near the proposed production incentives, would have a much higher near-term
energy balance return.</p>
<p ALIGN="JUSTIFY">As for tying free markets and conservation together, you
really don’t have to look farther than Title I of the House Electric
Emergency Relief Act. For a limited time only – since demand resource
management is, of course, only for hard times – FERC would be empowered to
establish a clearinghouse to facilitate agreements between those wholesale
sellers and wholesale buyers of power who are willing to sell "megawatts"
(i.e. forego purchase rights for a mutually agreed upon price, which FERC
statutorily directed to deem "just and reasonable." Sounds like a (gasp)
conservation incentive to me: what deregulation was originally trying to
achieve through price signals. Might even be temporarily compatible with
price caps. . .</p>
<p>But enough carping. To justify energy efficiency in this politicized,
code word-ridden environment, we must speak in the free market jargon of our
time: that of those who are selling energy guarantees for new homes. (Even
some utilities are doing this, although as the program manager of one of
them put it, "(I)t was a risk. But we set our faith in science. . .) Think
of America as a thermal envelope (your house) and consider its "infiltration
rates" (how fast your house is leaking) – or where we’re squandering our
bountiful energy heritage. Consider where are the "undesigned holes" (places
where air shouldn’t be entering your home) – or where government is punching
holes, rather than plugging them in your energy use profile. In short, see
the world through "spectrally selective glazing systems" (energy efficient
windows). And beware being buffaloed by "backdrafting of combustion
appliances" (which is what happens when your house is badly ventilated) – or
when your Thermal Envelope of Representatives is marching lockstep to a
myopic producer’s (oil) drum.</p>
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<span lang="X-NONE" style="color: black">ROGER FELDMAN, Co-Chair of Andrews
Kurth LLP Climate Change and Carbon Markets Group has practiced law related
to the finance of environmental and energy projects and companies for 40
years. In particular, he has analyzed and executed a wide variety and
substantial value of project financings. He chairs the American Bar
Association’s Committee on Carbon Trading and Finance, serves on the Board
of the American Council for Renewable Energy, and has been a senior official
in the Federal Energy Administration. He is a graduate of Brown University,
Yale Law School and Harvard Business School.</span></font></p>
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